Safaricom, Kenya’s leading telecommunications company, is anticipating a significant rise in earnings as losses from its Ethiopian operations decline. Having ventured into Ethiopia in 2022, Safaricom initially struggled with inflation, security concerns, and currency fluctuations. However, recent financial reports suggest a turnaround, with the company projecting earnings before interest and taxes (EBIT) of between KES 144 billion and KES 150 billion for the financial year ending March 2026, a substantial increase from KES 97.1 billion recorded the previous year.
The expansion into Ethiopia was a strategic decision aimed at tapping into Africa’s second-most populous market. While the journey has been marked by financial strain, Safaricom is now witnessing a reduction in its Ethiopian losses. The projected negative EBIT has significantly improved to between KES 23 billion and KES 26 billion, compared to the KES 61 billion loss reported last year. This recovery is largely attributed to enhanced operational efficiencies and an expanding customer base.
Back in Kenya, Safaricom continues to thrive, with its local operations remaining the primary driver of profitability. The company has reported a 10% year-on-year growth in service revenue, reaching KES 371.4 billion. Its customer base has grown by 16%, now standing at 57.1 million subscribers. Mobile money service M-Pesa continues to play a crucial role, contributing significantly to the overall revenue.
Safaricom’s CEO, Peter Ndegwa, remains confident about the company’s trajectory, noting that foreign exchange fluctuations in Ethiopia were offset by robust performance in the Kenyan market. The company expects Ethiopia to turn profitable by 2027, reinforcing its long-term commitment to the expansion. In addition, Safaricom’s board has proposed a final dividend of KES 0.65 per share, maintaining consistency with previous years.
As the company navigates the regional economic landscape, its ability to balance expansion with financial stability will be crucial in sustaining its market leadership. The resilience demonstrated in Ethiopia, coupled with strong performance in Kenya, positions Safaricom well for sustained success in the coming years.
